Meet the Exceptional Vanguard ETF That Allocates 59.3% of Its Holdings to the "Magnificent Seven" Stocks

In 2023, Wall Street coined the term "Magnificent Seven" to refer to a select group of technology giants that consistently outperformed the broader market. These companies now lead various sectors within the artificial intelligence (AI) space, which has further boosted their returns.

Since the AI surge began gaining traction at the start of 2023, the Magnificent Seven stocks have achieved a median return of 178%. In comparison, the S&P 500 index has only increased by 74% over the same timeframe:

NVDA data by YCharts

This means that investors who haven't held these dominant stocks have likely lagged behind the overall market in recent years. The good news is that there's an easy way to invest in all of them at once.

The Vanguard Mega Cap Growth ETF ( MGK -0.53%) is an exchange-traded fund (ETF) that focuses on the largest U.S. companies, with a remarkable 59.3% of its portfolio dedicated to the Magnificent Seven stocks alone. 

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The Magnificent Seven, plus some diversification

The Vanguard Mega Cap Growth ETF mirrors the CRSP U.S. Mega Cap Growth Index, which represents 70% of the total market capitalization found in the CRSP U.S. Total Market Index. If you were to sort all 3,508 companies in the CRSP U.S. Total Market Index by size, the Mega Cap Growth Index would start from the largest and include companies until it reached 70% of the total market value.

This ETF contains just 69 stocks, highlighting the high concentration within the U.S. corporate landscape. In other words, only 69 companies make up 70% of the value of all 3,508 publicly traded American companies, leaving the remaining 3,439 companies to account for the other 30%.

With the Magnificent Seven collectively valued at $20.7 trillion, it's understandable why they make up such a large portion of the Vanguard ETF.

Source: Vanguard. Portfolio allocations are as of Aug. 31, 2025, and may change over time.

Nvidia produces the world's leading graphics processing units (GPUs) for data centers, which are essential for AI development. The demand for its latest Blackwell Ultra chips currently exceeds supply, potentially driving further revenue growth.

Microsoft, Amazon, and Alphabet are among Nvidia's largest clients. Each company creates its own AI models and software, and they also provide cloud services that allow businesses to run their own AI applications.

Meta Platforms, a major social media company, is another key Nvidia customer. Meta uses AI to enhance its content recommendations on Facebook and Instagram, and it has also developed the widely used open-source large language model family, Llama, which supports features like Meta AI.

Apple rolled out its Apple Intelligence software last year, bringing advanced AI capabilities to iPhones, iPads, and Macs. With 2.35 billion active devices globally, Apple could become one of the largest distributors of AI software to consumers. Tesla, meanwhile, is at the forefront of AI-driven autonomous driving and robotics innovation.

Although the Vanguard ETF is heavily weighted toward the Magnificent Seven, it still provides some diversification. Its top 20 holdings also include large non-tech companies such as Eli Lilly, Visa, Costco Wholesale, and McDonald's.

The Vanguard ETF can help boost investor returns

Since its launch in 2007, the Vanguard Mega Cap Growth ETF has achieved an average annual return of 13.8%, with that figure rising to 18.9% over the past decade. However, because the fund is so concentrated, investors should avoid putting all their money into this single ETF.

Instead, this fund could be a smart complement to a diversified portfolio, especially for those with little or no exposure to the Magnificent Seven. For example, if an investor had put $20,000 into the Vanguard Total Stock Market ETF 10 years ago—a fund that holds 3,500 stocks and is considered highly diversified—that investment would now be worth about $78,825.

But if the investor had split the $20,000 evenly between the Vanguard Total Stock Market ETF and the Vanguard Mega Cap Growth ETF, their portfolio would have grown to $95,882 today.

This strategy is designed to prevent investors from becoming too exposed to volatile trends like AI, helping to shield them from significant losses if the technology does not meet expectations in the future.